Asia's Developing Future

Peer-to-peer or P2P lending is a way of financing debt online so that people can borrow and lend money without going through a financial institution, like a bank. P2P, also known as social lending or crowd lending, has no need for a middleman and has emerged as an alternative to traditional lending institutions around the world. An Asian Development Bank Institute study using data from Renrendai, one of the largest P2P lending platforms in the People’s Republic of China, found something interesting about the use of punctuation marks in P2P lending. Who would have thought that the number of punctuation marks used in borrowers’ text could influence funding probability, borrowing rate, and default of loans in the peer-to peer lending market? Read the transcript http://bit.ly/2HVBmM7 Read the working paper https://www.adb.org/publications/role-punctuation-p2p-lending-evidence-prc About the authors Xiao Chen is a PhD student at Jinan University, People’s Republic of China. Bihong Huang is a research fellow at ADBI. Dezhu Ye is a professor of finance at Jinan University. Know more about ADBI’s work on peer-to-peer lending http://bit.ly/2GTNFqP

Analysts and economists explain: How India’s government pushes for more urbanization by creating towns that will grow along with information technology. Read the transcript: http://bit.ly/2j6m649 What emerging economies can learn from South Korea, and how it weathered the Asian financial crisis and came out of it even stronger. Read the transcript: http://bit.ly/2G4YerO How corruption and weak national institutions can undermine food security in countries big and small, regardless of their natural resources. Will the world’s two most populous countries—China and India—be able to feed their people when food consumption is expected to go up by 50% in the next decade? Read the part 1 transcript: http://bit.ly/2mlGPBN Read the part 2 transcript: http://bit.ly/2mkgrbJ How the numbers on global trade imbalance don’t really give us the full picture. Read the transcript: http://bit.ly/2z9Kn1E And how longer life expectancy in China is widening the growing gap between rich and poor. Read the transcript: http://bit.ly/2G2TeUs Know more about ADBI’s work from ADBI.org. https://www.adbi.org

Providing total and improved sanitation services is a challenge across Asia, as population growth—up 5.7% on average in the past two decades—overwhelms existing infrastructure and outpaces planning. In Central Asia, South Asia, East Asia, and Southeast Asia, 1.7 billion people do not have access to safe sanitation, 780 million still practice open defecation, and 80% of waste water is dumped without proper treatment. The region needs to invest more than $71 billion to provide sanitation services to all. Countries in Asia and the Pacific can learn from the Republic of Korea and Malaysia about how to improve sanitation services, improve water quality and availability, broaden sanitation and strengthen governance, establish institutional mechanisms, and implement city-wide planning—all of which spur economic growth. Korea and Malaysia have harnessed innovative sanitation systems and involved the private sector in identifying projects that provide maximum coverage for communities. They have also put together sanitation projects funded by both the public and private sectors. Vedanti Kelkar, a capacity building and training associate at the Asian Development Bank Institute, explains the economic benefits of such a strategy. Read the transcript http://bit.ly/2F3wsLV Read the blog post http://bit.ly/2HgHdv5 About the author Vedanti Kelkar is a research associate at the Asian Development Bank Institute https://www.adb.org/adbi/about/staff-profiles/vedanti-kelkar Listen to another episode on sanitation http://bit.ly/2GeHeP7 Know more about ADBI's work on urbanization and sanitation http://bit.ly/2ClVQcX

Small and medium-sized enterprises are the backbone of Asia’s economies. The Asian Development Bank’s most recent SME survey covered 20 countries in Central, East, South, Southeast Asia, and the Pacific and showed that SMEs accounted for an average of 96% of all enterprises and 62% of the national labor force. SMEs contributed an average of 42% of the gross domestic product or manufacturing value added in these countries, and continued to influence trade. The latest data show that SMEs in the People’s Republic of China and India accounted for more than 40% of total export value, followed by 26% in Thailand, 19% in the Republic of Korea, and 16% in Indonesia. Yet their development is hindered because of the difficulty accessing affordable credit. Read the transcript http://bit.ly/2CbsUEl Read the working paper https://www.adb.org/publications/solutions-smes-difficulties-accessing-finance-asian-experiences About the authors Naoyuki Yoshino is dean of ADBI Farhad Taghizadeh-Hesary is an assistant professor of economics at Keio University, Tokyo Know more about ADBI’s work on SMEs http://bit.ly/2ElPHnb http://bit.ly/2CdtNwf Related Podcast http://bit.ly/2H6cRLR http://bit.ly/2tZS4mU

Basic household sanitation has long been outside the reach of cost-effective comprehensive solutions, especially in communities dependent on septic rather than sewage systems. But this is changing. Groups as varied as the Bill & Melinda Gates Foundation and a coalition of private-sector water technology interests are attacking the problems of fecal sludge management, or FSM, particularly in underserved communities. Thanks to innovative products and platforms and the collaboration of the Asian Development Bank Institute, the technology that moves water to bathrooms, taps, and kitchens worldwide is within reach of communities that don’t have complex and costly sewage systems. David Robbins, a specialist in on-site and decentralized wastewater management, found that FSM’s efficiency and effectiveness—the hallmarks of modern sewerage systems—can now be used to attract the private sector into a fledgling sanitation economy that can overcome the many political roadblocks faced by communities without sewers. Read the transcript http://bit.ly/2Bbv7mC Watch the full presentation https://www.youtube.com/watch?v=87p35v-I2pA About the speaker David Robbins is a specialist in on-site and decentralized wastewater management, with an emphasis on fecal sludge management.

Recent demographic and societal changes in both developing and developed countries have affected the employment of migrant workers in economies worldwide, and few sectors illustrate the international impact of these changes more than domestic work and home-based care. An increase in women’s employment, rapid population aging, increasing life expectancy, and lower fertility rates have strained traditional care arrangements in the developed and developing world. But tight fiscal policies have weakened already inadequate public services and protection for these migrant workers, who leave their families and homes for decades at a time to work overseas in hope of earning more money to send back home. Read the transcript http://bit.ly/2EkbKHA Read the working book https://www.adb.org/publications/safeguarding-rights-asian-migrant-workers-home-workplace About the authors Maria Gallotti is a migration specialist at the International Labour Organization (ILO), Geneva. Benjamin Harkins is a technical officer at ILO, Bangkok. Marie-Jose Tayah is the regional coordinator for the Middle East and North Africa at the International Domestic Workers Federation. Max Tunon is a migration specialist at ILO, New Delhi. Know more about ADBI’s work on labor http://bit.ly/2DLwDxy

Women who own small businesses are increasingly turning to digital platforms to source capital for growth as they battle discrimination from formal channels. Small and medium-sized enterprises consistently cite access to credit as the biggest constraint on growth and trade, and a 2016 survey commissioned by the Asian Development Bank confirmed that export firms headed by women reported greater difficulties getting finance than other trading firms. Globally, 10.1% of all formal-sector firms are led by women and only 3% in Asia and the Pacific. Banks are less likely to extend credit to SMEs as they tend to apply for smaller loans, have poorer financial documentation than big firms, and lack collateral, which banks say make it difficult for financial institutions to profitably assess risk and offer finance. Read the transcript http://bit.ly/2EiKdpS Read the working paper https://www.adb.org/publications/women-and-trade-gender-impact-trade-finance-and-fintech About the authors Alisa DiCaprio was a research fellow at ADBI at the time the research was conducted Ying Yao is a postdoctoral researcher at Hitotsubashi University, Tokyo Rebecca Simms was a research associate at ADBI at the time the research was conducted. Know more about ADBI’s work on women and the economy http://bit.ly/2n8Pl8u

Emerging economies can learn a lot from how the Republic of Korea faced down the financial crises of 1997 and 2008, and emerged from hard economic slowdown stronger than ever. Painful macroeconomic and financial reforms plugged structural weaknesses and restored investor confidence, and have put Korea in a better position to weather similar shocks, offering lessons for emerging Asian economies. Read the transcript http://bit.ly/2G4YerO Read the working paper https://www.adb.org/publications/twenty-years-after-financial-crisis-korea About the author Jong-Wha Lee is a professor of economics and director of the Asiatic Research Institute at Korea University. Know more about ADBI’s work on the Republic of Korea http://bit.ly/2B7KmJz

An already widening gap between rich and poor in the People’s Republic of China is likely to worsen due to its rapidly aging population. Increasing life expectancy and the effect of a decades-long family planning policy that limited the number of children people could have is felt throughout the economy. At the end of 2011, the number of people over 60 years old in the PRC reached 185 million or 14 percent of the population. By 2030, the PRC is expected to become the world’s most aged society, and by 2050, the number of elderly people is forecast to climb to 454 million, or 33 percent of the total population. Read the transript http://bit.ly/2G2TeUs Read the working paper https://www.adb.org/publications/population-aging-and-inequality-evidence-prc About the authors Xudong Chen is a professor at the School of Business, Department of Finance and Accounting, Baldwin Wallace University. Bihong Huang is a research fellow at ADBI. Shaoshuai Li is a PhD candidate at the University of Macau. Know more about ADBI’s work on aging http://bit.ly/2DFpsnS

Robust institutions and low levels of corruption are more important to reducing hunger than population size or the state of a country’s natural resources. Food security—the ability of a country to feed its people—will become even more important in coming years as Asia’s population rises and resources grow scarcer. A study of 10 countries in Asia and the Middle East found that food security grows alongside the development of political democracy, economic growth, strong judicial systems, and other institutions. Asia will need to produce more food despite resources that are already limited and will be even more stretched as populations grow. While environmental issues, including climate change, are tough challenges, institutional reform is the most important step for countries in the region seeking food security for their people. Read the transcript http://bit.ly/2mlGPBN Read the book https://www.adb.org/publications/food-insecurity-asia-why-institutions-matter Read the summary https://www.adb.org/publications/at-a-glance-food-insecurity-asia-why-institutions-matter About the editors Zhang-Yue Zhou is a professor at the College of Business, Law and Governance, James Cook University, Australia. Guanghua Wan is an economist at the Asian Development Bank, Manila. Know more about ADBI’s work on food security http://bit.ly/2mfu0cb

India and the People’s Republic of China must act quickly if they are to have enough to eat over the coming decades. For the PRC, the biggest challenges come before 2030, when its population is expected to peak, then decline. India, which will take over the mantle of the world’s most populous country around that time, will see its food needs continue to grow for decades after that, especially if it manages to ease the poverty that now afflicts one in five of its people. The outcome of the efforts in the PRC and India will have consequences for the food supply of Asia and the rest of the world. Their success in meeting their food needs will be especially important to other countries having difficulty feeding their own populations. Read the transcript http://bit.ly/2mkgrbJ Read the book https://www.adb.org/publications/food-insecurity-asia-why-institutions-matter Read the summary https://www.adb.org/publications/at-a-glance-food-insecurity-asia-why-institutions-matter About the editors Zhang-Yue Zhou is a professor at the College of Business, Law and Governance, James Cook University, Australia. Guanghua Wan is an economist at the Asian Development Bank, Manila. Know more about ADBI’s work on food security http://bit.ly/2mfu0cb

It can be hard to measure the effects of infrastructure investment on an economy. Knowing whether an investment worked means somehow identifying the revenue it generated amidst the noise of an economy in full swing. An Asian Development Bank Institute study used tax revenue as a measure of growth, and found significant contributions generated by the construction and operation of the line and the eventual connection of Japan’s southern-most island to the larger network of high-speed trains known as shinkansen, linking Kyushu with Osaka and Hiroshima on Japan’s largest island of Honshu. Read the transcript http://bit.ly/2BiskIz Read the working paper https://www.adb.org/publications/impact-infrastructure-investment-tax-estimating-spillover-effects-kyushu-high-speed About the authors Naoyuki Yoshino is the dean of the Asian Development Bank Institute (ADBI) https://www.adb.org/adbi/about/dean Umid Abidhadjaev is a project consultant on infrastructure at ADBI Know more about ADBI’s work on spillover effects http://bit.ly/2hGyAlm

Trade deficits are considered bad news for economies, and for an economy the size of the United States, a deficit of $745 billion in 2015, the largest seen in decades, would be cause for alarm. But the true picture is more complex. Looking beyond traditional statistics shows how burgeoning global value chains are now driving changes in the manufacturing of, trade in, and value of goods. Multinational corporations that have successfully leveraged global value chains have pivoted away from manufacturing and now concentrate more fully on marketing, design, and innovation. Apple, Nike, Reebok, the Limited, and the Gap are major players in consumer electronics, athletic footwear, and fashion-oriented apparel, but own not a single production facility in the United States. With the exception of Apple, none of them owns production facilities anywhere in the world. Official statistics have yet to catch up with new trade realities emerging from global value chains. Although the gross profit margins of the Apple iPhone exceed 60 percent and that of Nike products is more than 45 percent, this value is not shown in US export metrics. Read the transcript http://bit.ly/2z9Kn1E Read the working paper https://www.adb.org/publications/global-value-chains-and-missing-exports-united-states About the author Yuqing Xing is a professor of economics and the director of Asian economic policy at the National Graduate Institute for Policy Studies, Tokyo. Know more about ADBI’s work on international trade http://bit.ly/2AC03x0

Brexit and a potential US withdrawal from the North American Free Trade Agreement could have large ripple effects on trade in Asia, helping some countries and hurting others, according to prominent trade economist Ben Shepherd. What’s more, Asia’s tightly integrated supply chains could be disrupted in the aftermath. Shepherd told a seminar at the Asian Development Bank Institute that although the UK’s withdrawal from the European Union and a potential US pullout from NAFTA seem remote from Asia, any effects on trade flows will be keenly felt in the region. The trading system is a great example of a global, closed, integrated network, meaning if you change something somewhere, you change everything everywhere. These distant trade policy changes are important for Asia, even though we are geographically distant from that going on. Read the transcript http://bit.ly/2A8aN6p Watch the complete presentation http://bit.ly/2At679W About the speaker Ben Shepherd is a principal at Developing Trade Consultants. Know more about ADBI’s work on globalization http://bit.ly/2A5PuCh

Improved transportation links help communities prosper financially, but there’s an unexpected social dividend that can compound that prosperity—lower rates of smoking and drinking and higher levels of school attendance. The Philippine government started its “Ro-Ro” policy in 2003 to link up islands and other remote areas in the archipelago nation with a system of roll-on, roll-off ferries. Family incomes grew around the ports, with agricultural workers picking up non-farm work and farmers on islands around the ports able to increase their incomes through better access to markets and inputs to improve their farms. Altogether family incomes around the ports grew by about 4%. The increased access to jobs and rising incomes had an unexpected social impact—less smoking and drinking and more kids in school. Read the transcript http://bit.ly/2ASDMum Read the working paper https://www.adb.org/publications/impact-improved-transport-connectivity-income-education-health-philippines About the authors Kris Francisco was a research associate at the ADB Institute at the time of writing Matthias Helble is senior economist and co-chair of the Research Department at ADBI. https://www.adb.org/adbi/about/staff-profiles/matthias-helble Know more about ADBI’s research on Transport: http://bit.ly/2zORvP6 The Philippines: http://bit.ly/2BKNRqM